taxation and GST advice regarding equipment sales under a MOOWR license for a customer's greenfield project in Aurangabad

25 Sep 2026

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Seema Dwivedi

MOOWR duty deferral applies to imports and bonded transfers, while domestic equipment sales attract regular GST and input tax credit.
MOOWR permits duty-free storage and processing of imported goods, with Basic Customs Duty and IGST deferred until domestic clearance. It is distinct from a high-sea sale, which transfers title during international transit. Equipment supplied domestically to a MOOWR unit does not receive zero-duty or zero-rated treatment; normal GST applies and may be claimed as input tax credit. Duty deferment applies to imports and bond-to-bond transfers. (AI Summary)

We are offering our welding machines to one of our customers in Maharashtra (Aurangabad).

Their main plant is in Brazil and a new green field project is under construction.

Customer mentioned that they are procuring all the equipment necessary for the plant under MOOWR license where ZERO Duty is applicable.

Please could you review and advise whether this transaction is similar to HSS Sale.

What is a MOOWR License?

MOOWR stands for Manufacture and Other Operations in a Warehouse.
It combines a private warehouse license under Section 58 and manufacturing permission under Section 65 of the Customs Act, 1962.
It allows duty-free storage and processing of imported goods with no export obligation.
Duty is paid only when finished goods are cleared into the domestic market.

Key Benefits

No upfront duty: Basic Customs Duty and IGST are deferred until domestic clearance.
No duty on exports: Exported goods do not attract import duty.
Lifetime validity: The license remains valid as long as you follow compliance rules.
No limits: There are no minimum investment thresholds or geographic restrictions.

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Sadanand Bulbule

Replied on Sep 25, 2026

Not a High Sea Sale (HSS):

1.An HSS involves transferring the title of goods while they are still in international transit before crossing Indian Customs frontiers. In contrast, MOOWR is an in-country customs warehousing procedure (Sections 58 and 65, Customs Act) used to defer duty on goods deposited into a bonded factory.

2. If you are supplying from within India (Domestic Supply): "Zero Duty" does not apply. MOOWR is solely a Customs duty-deferment scheme for imports. Domestic purchases by a MOOWR unit are not zero-rated (unlike SEZ supplies).

You must charge standard GST (18%) on your tax invoice, which the customer can recover as regular Input Tax Credit (ITC). If you are shipping directly from abroad (Import Supply).The customer can file an "Into-Bond" Bill of Entry (Yellow Bill) at the port and receive the machines with 100% upfront deferment (0% paid at entry) of both Basic Customs Duty and IGST.

If you are billing and dispatching locally from India, inform the customer that MOOWR cannot be used for GST exemption on domestic supplies. Normal GST applies and will be routed via standard ITC mechanisms.

Shilpi Jain

Replied at 7:02 AM

Purchase by a MOOWR unit domestically entails no benefits. GST is applicable.

MOOWR gains only on imports or bond to bond transfers where the customs duty and GST is deferred.

Is your customer asking you not to charge any GST?

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taxation and GST advice regarding equipment sales under a MOOWR license for a customer's greenfield project in Aurangabad